General Motors is suing Fiat Chrysler, alleging its rival benefitted from bribes to auto union officials that gave FCA an unfair benefit in labor talks, GM announced Wednesday.
The lawsuit points a finger at the late Sergio Marchionne, FCA’s former chief executive, who is accused of being a central player in a conspiracy with corrupt United Auto Workers officials to support a tough contract on GM that would then force GM into a merger with FCA.
It references guilty pleas by former FCA executives, who bribed former UAW officials, in a long-running case involving a UAW employee training program, that has tarnished the union’s image.
The suit comes only weeks after the UAW ended a lengthy strike at GM. The union is currently immersed in labor talks with FCA, the last of Detroit’s “Big Three” to negotiate after workers ratified contracts with GM and Ford.
“FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time,” GM said in its announcement.
The federal racketeering lawsuit alleges FCA’s actions “corrupted the implementation of the 2009 collective bargaining agreement” as well as “the negotiation, implementation, and administration of the 2011 and 2015 agreements.”
Marchionne depicted as central player
The suit also implicates Marchionne, who died in 2018 and is depicited as an architect of a scheme to pressure GM into a merger with his company, in part by manipulating labor contract talks in a way that benefited FCA and harmed GM.
Marchionne “schemed to use the collective bargaining process to harm GM by becoming the lead in negotiations and attempting to force a merger of the companies,” the GM lawsuit said.
“For years, Marchionne had made clear to GM his desire to merge companies, voluntarily or through force.”
After GM rejected the pitch, Marchionne and others at FCA schemed with corrupt UAW leaders to tilt the labor negotiations in a way “that could impose unanticipated costs on GM in order to force a merger,” according to the claim.
FCA dismissed the lawsuit as “meritless” and said it was timed to disrupt the company’s proposed merger with French automaker PSA, as well as ongoing talks with the UAW.
“We are astonished by this filing, both its content and its timing,” FCA said in a statement that also alluded to the company’s ongoing labor talks with the UAW.
“We can only assume this was intended to disrupt our proposed merger with PSA as well as our negotiations with the UAW.”
A spokesman for the UAW said the union contracts were not affected by the bribery scandal but it was “regrettable” the scandal had cast doubt on the process and that the union was committed to cleaning itself up.
“Those contracts, which were ultimately ratified by our membership, were negotiated with the involvement of both local and international representatives and the process had multiple layers of checks and balances to ensure their integrity,” the UAW spokesman said.
“That said, the fact that these issues can cause doubt about the contracts is regrettable. The UAW leadership is absolutely committed to making whatever changes are necessary to ensure on our end the misconduct that has been uncovered will never happen again.”
Shares of both GM and FCA were sharply lower in afternoon trading, with bigger losses than the broader market. GM was down 3.2 percent at $35.24, while FCA was down 3.8 percent at $14.98.